A landed cost is the total cost incurred, or payable when the goods land in your warehouse. The landed cost is important to consider when calculating the potential profit or loss associated with the sale of a good. A landed cost should include all direct costs, indirect costs, and allocated overhead expenses such as the initial sale price, transportation costs, tax and duty that may be applied on the importation, and any subsidies paid by the Government.

Some of the costs may include

1. the total cost of the goods and packing
2. transportation to the port and port changes
3. international logistics and freight forwarder charges
4. import duties and fees to be paid to the government
5. currency conversion costs,
6. clearance fees at customs, and
7. even local delivery fees to the final destination
   

How to Calculate Landed Cost of Imported Products?

The first step to calculating the landed cost of imported products is to ask your exporter to send you a detailed quotation. The quotation should include the following:

• Shipper and consignee details
• Port of Loading (POL) and Port of Discharge (POD)
• Currency of transaction
• Product and packaging sizes
• Product Harmonized System Code or a Tariff Code (HS/HST Codes)
• Shipment type by full container - FCL, Less than Container Load - LCL, Cargo, etc.

Contact a freight forwarder and find out the international freight and import costs. In the global trade industry, most shipments are sold as Free-on-Board, which means that the buyer or consignee has to pay for any additional costs and charges after the goods have been loaded on board the vessel.

A freight forwarder's quotation is usually itemized and shows all the fees that are involved, including:

• Local fees and charges in the country of import (you should ideally get these costs in your local currency to ensure there is no mistake in calculating the final cost) - This section also includes any local port handling costs, customs clearance, documentation required, quarantine if needed, marine transit insurance, trucking cost at either destination, etc.
• International Sea freight from Port of Loading to Port of Discharge - The airfreight and sea freight rates are different throughout the year, so make sure to confirm the validity date of these costs.
• Local Import Duty & Tax Rates - If you have the HS Code for the goods you want to import, the freight forwarder or customs broker can confirm the rate of duties that will be applied to the imported goods. This process is different from country to country, so make sure to confirm based on your location.
  

PS: Don't forget the actual foreign currency exchange rates and costs

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Add up the cost per unit, the carrier fees, taxes, tariffs, and duties, along with any processing fees and insurance, and you can adjust the shipping and pricing costs accordingly. The formula for calculating landed cost is:

            Landed Cost = Product + Shipping + Customs + Risk (Insurance) + Overhead

If you are planning to import several items inside one shipment itself, you will have to calculate the landed cost per product. You can also split up all the additional costs by cubic volume or by weight, which is greater. To do this, you need an understanding of the packaging sizes and weight of each product as well. Once you understand the landed cost of the products to be imported, you can then decide to place a new order with your international suppliers

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